Thursday, October 14, 2010

Micro and macro economics

Wouldn't it be nice if all you had to worry about every day was punching the clock from 8 to 5 and then figuring out what to do with the rest of your time? The industrialized economy of the United States had us there for a few decades, but those times are becoming a thing of the past. Factory work and manufacturing used to make up the backbone of our middle class. Almost all gone overseas to countries that now sell things we invented (cars, planes, TVs, computers, etc) back to us. Goodbye jobs, goodbye dollar.

The bulk of mankind's history is a long story of uber-wealthy ruling over a large group of peasants, with a few well to do merchants thrown in the mix. As a nation, we are headed down this road again.

In dealing with your job or business, you have to worry about a number of things - from making sure you do a good job for your boss, to finding new clients/business. If you work for someone else there is a constant small background fear of being replaced or downsized or outsourced. Anyone owning a small business has a myriad of other micro- factors to worry about. This set of challenges is difficult, hence 50-60% of new small businesses are shuttered within five years. So if you are your own boss, you have a 1 in 2 chance of surviving more than 5 years. You can adjust this for your knowledge base, industry and expertise, but the odds are already not great.

Now since this is not challenging enough, you have to look at the world from a macro- standpoint. War, famine, union strikes, deficit spending, inflation/deflation hedging, commodity and asset prices, tax policy, and so on. Not only do you need to worry about the new competing service or product that Joe Sixpack down the street has started offering, you have to bear in mind the long term consequences of health care reform's impact to your bottom line. You have to proactively seek out new products and services to offer as the old ones grow stale or lose customer value. You can never sit still and relax. If you do, the sharks will eat you.

And you have to remain positive and retain a modicum of belief in your economic system, or fight to improve/change that system, otherwise it is time to head to the mountains with a shotgun and wait for the zombie apocalypse.

What is money? Money is a symbol of value that can coordinate/facilitate the exchange of goods and services a group of people can agree on. A US dollar (at the time of this writing) equals 6 chicken eggs or so. 1 dollar also equals about 1/4lb of ground beef. Hence 6 chicken eggs equals 1/4 lb of ground chuck. A videotaped hour swim lesson with me is worth about 450 eggs. Don't bring those to the pool. The "money" makes it easier to conduct the transaction.

Now imagine some idiot government prints so many dollars they would not only buy all the eggs ever laid on the planet, it would buy all the chickens and cows and horses and goats, too. It might make you question the actual assigned value of that dollar. Maybe it is no longer worth 6 eggs. Maybe it is worth 1/6 of one egg. Maybe .000006 of one egg.

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MartyMartyMarty

I'm a big fan of outdoor sports and work as a triathlon and swim coach in Cary, North Carolina. I celebrate life with my wife Bri, my son JuniorAwesome, and my dog Tassie. We visit the beach or mountains when time and circumstance permit.